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Intangible Specialization Affecting Fiats Strategy and Output-Mix Optimization in the 70s -90s

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In the case of Fiat, ‘ intangible specialization” in the product design limited the company’ s access only to the lower end market, also lessening its “ output mix flexibility “ even when it possessed technical suppleness in the production sector (Maeilli, 2005, p. 249). Looking at the era of 1960 after the term was coined. Engineers were struggling to keep up with the domestic demand and sweating with ideas to produce lightweight cars but in bulk amount. As engineers were working efficiently for retaining more customers, the sole application of this strategy was indirectly locking the Fiat business in the lower sector.

This process continued and intangible specialization found its nesting place in business ethics. Lifetime employment and promotions were involved in the painted picture of Intangible specialization. For confining costs, strict routines were developed by Fiat in the 1960s, because the costs of materials being used were high as compared to sales. The domestic market was adversely affected by low and unjust income distribution. To compensate such losses, product design was further enhanced to lessen the weight of the vehicle. Through this innovation, material costs were likely to be saved.

Alterations were also made in the design process by reducing task duration and manufacturing life cycle time (Clark, Maielli & Blundell, 2006, p. 5). But still, the global strategic position of Fiat did not look promising. Required changes were not distinctively seen because of the conflict between marketing managers that wished to expand output-mix flexibility in the attempt to the ongoing changes in demand, and the technical team seeking ways to maximize its specialization in small family cars production sector (Maielli, 2007).

The developers of Fiat though inspired by American mass production strategy selected areas that suited Fiat policy alone. They kept their focus minimal on two drivers: (1) emphasis on the weight of the car(2) simplification of managerial tasks towards cycle-time reductionThis particular planned work till 1960. Inspired by American strategy, cars like Fiat 500 and 600 were not suitable for other European countries as those users were used to high quality and technically advanced cars. Fiat, however, failed to provide the desired capacity and size to the European natives. This eventually led to the failure of Fiat’ s strategy as the progress in its upper segment was dormant.  

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